Comment: Chancellor’s sleight of hand

Patrick Harvie

Published:09:00Saturday 11 July 2015

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Since the financial crash the Tories have pulled off a devious trick, with devastating results.

They’ve managed to persuade many people that the country needs even more of the free market fundamentalism that failed us so badly, and that wealth inequality is just the price that needs to be paid for economic “recovery”.

This week’s budget was bursting with examples of this agenda.

Cutting the tax paid on million-pound inheritances was one measure trailed in advance.

This is unearned wealth, which the people receiving it haven’t worked for.

The inequality of wealth in our society is even greater than the inequality of income, and this millionaires’ tax cut will make it even worse.

But the “rabbit from the hat” in this budget was on wages. Seen in isolation a proper Living Wage would benefit many people.

The Greens campaigned actively in the UK election calling for the minimum wage to rise immediately to match the Living Wage, and then to rise to £10 per hour by 2020.

For too long employers have got away with paying poverty wages, leaving people dependent on the welfare system to make ends meet.

So the announcement of a “National Living Wage” might be seen by many as something to cheer.

Taken on its own, that would be fair enough. OK, at £7.20 per hour it won’t start off at the level of the true Living Wage, which is currently £7.85, and it will only reach £9 by 2020, not the £10 we proposed. But a step in the right direction maybe?

Well, yes and no. It will increase the incomes of those on the minimum wage, and they will then be on an upward trajectory.

But the Living Wage is calculated according to what people need to live on without being in poverty, and this new rate isn’t.

It’s not honestly a Living Wage in that sense.

More urgently, it’s being done at the same time as a massive attack on the welfare system.

Most non-pensions benefits go to people who are in low paid work — and the Chancellor will be making savage cuts there.

Taken together, this will still leave many working people worse off — a bit more income from their employer, but a lot less coming from their tax credits.

This trick, of giving with one hand while taking away with the other, is designed to distract people from the fact that handing out corporate tax cuts to the employers who created so much working poverty is just a different way of subsidising the wage bill of big businesses.

This budget will inevitably make inequality worse in our society. It’s nothing more or less than we should expect from a Tory government.